What climate risk could cost a hotel and resort group
An assessment of 44 hotel and resort sites found that changes in the cost of flying could outweigh physical climate damage. Results were expressed as a share of turnover.
Coastal tourism is exposed twice over
A hotel and resort group on the Adriatic faces the obvious physical risks: wildfire in the hinterland, extreme wind, flooding, water stress through the dry season. Those threaten the buildings and the land they sit on.
But the greater part of the exposure is not physical at all. Guests have to arrive, and most arrive by air. A group whose revenue depends on long-haul and short-haul visitors is exposed to what carbon pricing does to the cost of flying, quite separately from anything the weather does to its properties.
The assessment considered physical and transition risks together, expressing the results as a share of turnover.
sites assessed, hotels and camping resorts
Assessing costs to properties and guest travel
-
Properties and guest travel
RedLines assessed physical risks to the properties alongside sea water quality, energy prices, carbon pricing and the cost of international flights.
-
The group's own data
The analysis used property, operational and guest-travel data to compare exposure across three scenarios and three time horizons: 2030, 2040 and 2050.
-
Modelling each risk
Each estimate combined impact and probability. Wildfire analysis drew on regional records from the European Forest Fire Information System.
Potential costs relative to turnover
The assessment estimated financial exposure equivalent to 1.1% of turnover by 2030, 3.5% by 2040 and 7.4% by 2050.
Flight pricing proved the largest single contributor, and it cuts both ways. Under the low-emissions pathway it appears in 2030 as an opportunity rather than a cost, before turning sharply negative by 2050 under the high-emissions one. Wildfire was the most substantial physical risk across all three scenarios, with sea water quality, driven by algal bloom, close behind.
- 44 sites assessed on one method, hotels and camping resorts alike
- Financial exposure equivalent to 1.1% of turnover in 2030, rising to 7.4% by 2050
- Nine risks quantified across three SSP scenarios and three decades
- Transitional risk, chiefly the cost of flying, found to outweigh physical damage
Need climate risk in a form your board can weigh?
Quantified against your own revenue, covering the transitional risks as well as the physical ones.